radiata plantation profitability

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8 years 10 months ago #39731 by simon.w
Hi all,

I'm looking at several lifestyle block options for my family and quite a lot of properties for sale feature radiata plantations. I'm curious as to how profitable they are, and whether I should factor the profits (if any) into the purchase price of the estate?

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8 years 10 months ago #507728 by max2
We are 2/3rds through harvesting our pre 1989 forestry and spoke to a number of loggers, agents and others over several years to get an idea of where we stood.

About 4 actually bothered to turn up to look and the advice given varied from they were crap, we would break even to a nice conservative figure being received, a lot of which will need to be put back into the property.

We opted out of the carbon credits scheme when there was the window period of doing so. I don't know where things stand with it now, google will be your friend to advise there.

In our experience it totally depends on who you are dealing with. I have heard story after story of people being ripped off, loggers going bankrupt before paying the grower and $$'s, properties being left a mess. We came very close to signing with one chap and at the last minute saw some of his mens work at a neighbouring property which was left a mess. We were fortunate a chance conversation put us in contact with someone else who has no need to advertise his services, and we have received monthly payments, the loggers are under his management and they don't receive their payments until each worked section has been tidied, but is he fair minded to all.

So there are a few variables out there. We have no intention of re-planting radiata again. Hate the blinking things. We are happy with what we are receiving but I wouldn't go into it relying on it due to above.

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8 years 10 months ago #507759 by LongRidge
Blocks of forestry smaller than about 10 hectares are expensive to log so any profit is likely to be small. The value of the trees will probably have been factored into the price that is being asked, and often the value is totally unrealistic. If you are buying trees, check if the current owners have a book value for it, otherwise get a valuation of your own done, as high as possible. Then when you sell the trees you pay tax on the sales minus the purchase price, rather than on the larger sales price only.
Value also depends on ease of access and quality of roads and bridges, distance to the port or processing plant, quality of pruning and the records kept about that. Many people here are doing high pruning, but the plywood mill is 400 km away on the West Coast with narrow winding highways. But there is a laminating factory in Nelson that can handle unpruned logs .... I have been lead to believe.

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8 years 10 months ago #507762 by Farmersden
Beware what the sellers tell you, get a second opinion: there is an empty block near ours that is mostly radiata pine (about 20 hectares) for sale.. the sales blurp claims the trees have been "maintained" but the work done on them has been minimal and poor thinning so the wood is of little value and no resource consent to log it out so realy high risk to anyone buying..

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8 years 10 months ago #507764 by muri
Getting rid of the 200 or so 30 year old pines was the best thing that ever happened to this block.
I got nothing for them, someone took them for firewood
Most people wanted to charge me mega bucks to get them out
By the time 40 loaded trucks had gone out there was considerable compact of soils
There were also some damaged fences and land out of action until all the logging trucks and equipment had left

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8 years 10 months ago #507798 by stephclark
agree with muri.. best thing we did was give the bliming things away for firewood..

recently drove past a place down the road from where we lived that had had the trees taken out ( firewood/logs? ).. what a mess.. the soil acid and all the stumps and tailings left.. then what?.. unless back into pine, would cost $$ to repair soil to grazing quality

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8 years 10 months ago #507806 by Foxwell
We have 20 ha of pines between 15 and 20 years old. Bought the property 9 years ago. Price of logs of various qualities go up and down over the years and we are not taking anything for granted about what they might yield for us when they are harvested. Anything we get will be a windfall.

I would not factor anything into the price, unless they are within a year of harvesting and all other factors (that others have mentioned) look good.

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8 years 10 months ago #507807 by max2
Farmersden is spot on. When we purchased ours, some 17 years ago the forestry valuation supplied by the vendor to the selling agent ''upon maturity'' with projected costs was valued at a minor fortune and totally so irrelevant in today's terms.

Grade of tree also makes a huge difference to a plantations value. Transportation eats up a lot of the costs depending on your location. Most of us has gone through Auckland but only because our agent has a financial interest in the yard. Otherwise its off to Tauranga where the log prices (if I recall correctly) are slightly higher but the transportation (for us) more expensive than sending it to Auckland.

There is a monthly report prepared by Olsens if you care to google it which gives an excellent report as to the worth of various gradings of pine.

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8 years 10 months ago #507864 by rhyso
Sounds like (small scale) Pine is more of a liability than an investment...

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8 years 10 months ago #507869 by Ronney
If the block of land has pines on it, give it a miss unless you want to lose money and have a great mess to deal with. There are better things available.

Cheers,
Ronnie

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8 years 10 months ago #507874 by Kiwi303
Or if the price is right, the location is right, the size of the unforested portion is right and you don't mind just letting them sit...

You should have enough firewood there to last you until they nail you into your box for the final journey off your land.

Probably even including a couple of trees a year to the local rotary/lions/scouts/church as a fundraiser or to fill the woodsheds of the pensioners in the local community who wouldn't otherwise manage to get wood.

I wouldn't personally figure "profitability" into having pine trees on the land, but "woodlot" yep, they could be handy.

You Live and Learn, or you don't Live Long -anon

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8 years 10 months ago #507882 by igor
Remember that unlike other crops trees can be left to sit until prices are favourable. They can also provide valuable shelter for stock in rough weather. I would not rule out a block purely because part of it was planted in radiata.

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8 years 10 months ago #507893 by max2
The trouble is with pines they grow and grow taking everything out of the soil nutrition wise and thus minimise the areas you can successfully graze stock (ie no grass).

Then as they get taller they fall over in the most inconvenient locations and usually across a track.

We asked our local rotary just prior to summer if they would like to come out and collect the offcuts and whilst they acknowledged our offer (or at least one member did) we never heard from them again. We made our offer after last winter the same branch was asking for donations of firewood for two needy families in the district.
We have offered the offcuts to many people and no one wants it because it means they have to come out and cut some of it up into manageable amounts and load it.

So we recently burnt two extremely large piles as cut pine quickly rots down if left out.

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8 years 10 months ago #507901 by LongRidge
Very big pines can be left for a bit longer only if they have been regularly and properly pruned, because these can by used for plywood manufacture. But for sawmill timber there is a maximum "small end diameter" size. Logs bigger than this cannot be handled by that mill. Most of the modern saw milling equipment is made in Scandinavia where they have millions of hectares of very old, and very small, trees. Thus for export and modern NZ mills, big trees cannot be milled. Thus there is a maximum size for radiata :-((.
My neighbour milled his 20 year old trees 18 months ago, and timed it exactly right for the Chinese market. But if he had waited 4 years he would have got about twice as much timber from his forest.
I'm of the school of thought that pines do not harm the nutrients of the soil. Certainly they need nutrients, which have to be replaced if converting the forestry to pasture. But pasture also needs the nutrients replaced, including acidity modification which is done by applying limestone. Pine have deep roots so tend to draw out mineral reserves that are too deep for pasture to access. When the roots near the surface rot, these nutrients become available. Grasses grew very well indeed when our pines were harvested.

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8 years 10 months ago #507924 by chocolatewoolnz
Radiata blocks can be profitable. Depends on quality, age, location and the timing of milling. I had 1.5Ha of 26 year old trees milled in January, after consultant, logging, transport costs etc, profit was $41K + GST. However, this does not include costs associated with fixing one damaged fence, windrowing and establishing grass. There is still plenty of firewood so I will be getting that out before windrowing.

86 acres with Gotland, coloured merino and a few white sheep www.chocolatewoolnz.com + 1300 strawberry plants www.gilchriststrawberries.co.nz

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